Energizing A Portfolio With Low-Cost Oil & Gas Funds
Benzinga 11 years ago
CommoditiesMarketsTrading IdeasGeneral
While falling oil prices are sending many investors scurrying away from sector investments, others are shopping for bargains.
There's still plenty of uncertainty about oil prices and how much further they may fall. Adding to the sector malaise was a comment from Prince Alwaleed bin Talal of Saudi Arabia, who opined that the $100 barrel of oil is a thing of the past. Many industry analysts agree with him.
Though consumers in the U.S. and other nations can benefit from the drop in prices, oil-producing countries such as Russia and Saudi Arabia are experiencing wider, negative economic ramifications.
For investors who want to participate in the eventual upside (which always arrives, eventually), funds offer a way to diversify beyond single-stock picks. If prices continue dropping, fund investors can dollar-cost average, while waiting for the rebound. There are bargains to be had; investors may just have to be a bit patient.
Related Link: Russia Woes Drag Down Country-Focused Funds
Generally speaking, it's wise to focus on the lowest-cost ways to get exposure to any given sector, region or index. Fund families Vanguard and Fidelity are well known for offering inexpensive ways to access particular asset classes.
Vanguard Energy
The Vanguard Energy Fund Investor Shares (MUTF: VGENX) consists mainly of large-cap growth and large-cap value stocks from the energy sector, with an emphasis on North America. Top holdings should come as no surprise, with the following as the most heavily weighted positions:
- Exxon Mobil Corporation (NYSE: XOM)
- Chevron Corporation (NYSE: CVX)
- Royal Dutch Shell plc (ADR) (NYSE: RDS-A)
- Schlumberger Limited. (NYSE: SLB)
- Pioneer Natural Resources (NYSE: PXD)
The fund's expense ratio is 0.30 percent, which is low for an actively managed fund.
Fidelity Select Natural Gas
A more focused fund is the Fidelity(R) Select Natural Gas Portfolio (MUTF: FSNGX). This fund seeks to invest at least 80 percent of its assets in companies involved in all facets of the natural gas industry. It invest in the U.S. and overseas. Top holdings include:
- Encana Corporation (USA) (NYSE: ECA)
- Devon Energy Corp (NYSE: DVN)
- Baker Hughes Incorporated (NYSE: BHI)
- Canadian Natural Resources Ltd (USA) (NYSE: CNQ)
- Williams Companies Inc (NYSE: WMB)
This fund is also fairly inexpensive, with an expense ratio of 0.84 percent.